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PeopleSoft modifies refund program

Company says changes were made due to information that came to light during the trial and to address concerns raised by the judge.

WILMINGTON, Del.--PeopleSoft has altered its customer refund program to fix some ambiguities about who might qualify for money back if Oracle buys the smaller company and discontinues support for certain products.

Kevin Parker, PeopleSoft's co-president, testified on Wednesday that the board of directors adopted language this week specifying that only existing customers--not "pristine or brand-new customers"--would qualify for the rebate program, which Oracle is trying to eliminate in the trial that began last week.

Parker indicated that the changes were in response to last week's parade of witnesses, some from PeopleSoft, who acknowledged that the rebate program was complex and confusing, and imposed an ill-defined obligation on Oracle or any potential acquirer.

"Oracle does not have to provide updates to applications that PeopleSoft does not update," Parker said during testimony in Delaware Chancery Court.

PeopleSoft announced on Tuesday that the program, which expired at the end of September, would be extended until Dec. 31. It was adopted soon after Oracle's hostile takeover bid was launched in June 2003.

Oracle claims in its lawsuit that the customer assurance program is unprecendented in U.S. corporate history, and is unlawful because it ties the hands of any future board of directors.

The controversial program guarantees that PeopleSoft customers will receive a refund on the cost of their software license if Oracle, within four years of acquiring PeopleSoft, discontinues or materially reduces its support services for PeopleSoft's software.

Judge Leo Strine seemed irked at some of Parker's evasiveness under oath, suggesting that some of the executive's responses were "cagey." Parker was cross-examined by an Oracle attorney. At one point, Strine required Parker to reveal whether or not his attorney had helped him to prepare nonresponsive answers during a deposition that took place a few months ago.

"We've already seen a really cagey and incomplete answer that directly contradicts" what Parker said this morning, Strine said. Oracle should "enjoy the Anglo-American tradition of jurisprudence and truth finding," Strine added.

Parker denied that he and his attorney colluded to make it difficult for Oracle's lawyers during the deposition by asking them repeatedly to define words like "receive" and to read back questions.

The Delaware case, which is expected to conclude this week, represents Oracle's attempt to eliminate the poison-pill defense, which would effectively block any hostile takeover of PeopleSoft.